Bawany Air Products Limited (BAPL) said on Tuesday it will raise Rs6 billion through a rights issue of nearly 600 million shares at a price of Rs10 per share.

The listed company, which at the time of this announcement was classified as a defaulter, shared the development in a notice to the Pakistan Stock Exchange (PSX).

“The company shall issue 599,999,732 ordinary shares, at par that is at a price of Rs10 per share, aggregating to Rs5,999,997,320,” read the notice.

BAPL informed that the quantum of the right issue is approximately 7997.32% of the existing paid-up capital of the company i.e. approximately 7997.32 right shares for every 100 ordinary shares held by the shareholders of the company immediately prior to the close of the share transfer books of the company.

It is pertinent to mention the Right Shares refers to those issues of shares which a company offers to their existing shareholders at a discounted price.

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In its notice, BAPL shared that the purpose of the right issue is to meet the working capital and project completion of Alman Seyyam Sugar Mills Limited (ASSML).

“ASSML is a 10,000 metric tons per day (MTCD) crushing capacity plant, currently under construction at Dera Ismail Khan. The major plant components are of Pakistan, UK, German, Japan and China origin,” read the notice.

BAPL said with 10,000 MTCD already planned, ASSM has targeted a substantial share in the local and international markets as a quality producer of refined white sugar & molasses. “By investing in ASSML the company can earn return in the form of dividends, consequently give returns to the shareholders,” it said.

The company informed the right issue is being carried out at a price which is less than the current share price in the market and hence there is no major investment risk associated with the right issue.

“Normal risks associated with the business will remain,” it said.

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BAPL was of the view that the right issue is expected to have a positive impact as the company “will be moved from non-compliant to regular counter with the change of its principal line of business which besides others will mainly be to invest in and acquire and hold and otherwise deal in shares, stock, debenture, debenture stock, bonds, obligations and securities issued or guaranteed, thereby enhancing expected returns to the shareholders”.